SEMI's January Book-to-Bill ratio of 1.20 came out last week showing impressive growth numbers. Since we track these ratios monthly, and report on them when they show particularly important and interesting trends, the January numbers coupled with the news reported
here in last month's
MarketWatch Commentary further confirms the upward trending.
That's all fantastic news. We also know that there are numerous reports and forecasts of shortages set to continue for a handful of sectors in semi, due in part to the lean inventory management that saved many during the recession, and due to the reduced utilization levels and CAPEX at the fabs for a few years that have also reduced capacity in the market. These variables have helped strengthen ASPs and resumption in some consumer demand has also helped orders as reflected in the strong three month moving average (3MM) book-to-bill ratios with billings at US $946.3 million and bookings at US $1,132.4 million (=1.20 ratio).
January's positive indicator has not been matched by uniformly positive macro economic forecasts for the later half of 2010. While we see very strong numbers for this year (Y10), the financial analysts are either getting bored with the better times or there are dips ahead in our ongoing roller coaster ride.
At MarketWatch we've been noting the connection between semi's health and consumer demand for years. That means, of course, that we need to think smartly about this 'rebound' year and not expect an easy upward trajectory revenue ride.
The Information Network was reported by DigiTimes on 2/23/2010 as forecasting a "mid-year Y10 slowdown in semiconductor revenues [...]. Personal consumption will remain sluggish in the second half of the year because of a jobless recovery, further deterioration in credit, and continued weakness in home prices." These concerns are echoed here in Manufacturing.net but with predictions moved to 4Q10. Wall Street analysts tend to see greater storm clouds, such as this one, but as financial analysts say, "that and $2 will buy you a cup of coffee."
Here at MarketWatch, we'll be monitoring ALL of the information to provide you with reliable insight, as more data unfold and can be brought into a fuller analysis. Watch especially for our next Quarterly edition in April where we'll feature the economic state for semi in the Americas.
Posted by: Lisa Ann Cairns, Ph.D. in utilization, Memory, Market Trends, IC, fab, Equipment, DRAM, CAPEX, CAGR, ASP on
Jan 22, 2010
Last week was the SEMI 33rd annual Industry Strategy Symposium (ISS);
SEMI is a leading global semiconductor industry association. At this conference industry analysts and economists alike presented research and forecasts pointing to the significant recovery that the semiconductor industry is expected to face in 2010. However, with these rosey forecasts came a number of
cautionary words that the industry supply chain does not appear to be poised to enjoy all of the benefits of this positive projection.
The semiconductor industry has been faring better than many industries based on 4Q09 reports. The 1H10 forecasts continue to show the tendency for pent up demand to be strong from consumer and corporate sales alike. However, with the loss of almost two years of CAPEX investments to support fabs, the growth that we're engaging now may prove to be a tough challenge for the industry because of these "missed investments," as underscored by Bill McClean, President of IC Insights.
According to McClean, IC Insights research and data show that despite the "worst recession in 63 years (since 1946) in 2009, flat PC unit shipments were quite an amazing accomplishment. Moreover, cellphone unit shipments were down only 5%. Now consider that both PC and cellphone unit volume shipments are forecast to increase at double-digit rates in 2010." This begs the following questions from the recent McClean Report: "What effect will this have on the IC industry? Are we on the cusp of an all-out IC market boom for 2010?"
IC CAGRs are forecasted in the 9% range; ASPs and revenue are set to rise across the board for memory, even for DRAM; increased demand is expected for PCs; and emerging economies' consumers are hungry for electronics. Underscoring this positive reality is the recently released, strong, 9% increase in North American-based semiconductor equipment manufacturers book-to-bill ratios, now at 1.03 for December, holding onto a 6-month rise.
The 2010 forecasts are no longer just New Year's dreams. While exciting and welcomed news, these forecasts pose interesting challenges for the industry that must now grapple with being able to meet what TSMC calls "urgent recent increases in customer demand." TSMC has begun both new construction and capacity expansions at their fabs in Taiwan, increased R&D spending for 2010 by 25%, and plan to hire 3,000 new staff, "primarily engineers."
Those companies who remain from the last round of survival of the fittest now have a new, positive battle ahead. Economic indicators are up 1.1% for December 2009 and point to economic growth this Spring. Are we really ready?!
Lisa Ann Cairns joined the Smith network of businesses in 2001 as a Technology Strategist and became the Chief Strategy Officer for a Smith subsidiary the following year. More recently, Lisa has been involved with various strategic marketing projects for the Smith network and is the Senior Contributor for MarketWatch. Prior to joining Smith, Lisa was an Assistant Professor at Texas A&M University. Lisa received her Ph.D. (1998) and A.M. (1992) from The University of Chicago, during which time she was awarded a National Science Foundation Doctoral Dissertation Research Improvement Grant. She holds a B.A. from Hofstra University, 1988, where she was the first woman undergraduate to receive a Fulbright Scholarship.